Stock trading has migrated from the exchange floor to the internet. Today, it’s much easier to buy online stocks from the comfort of your own laptop. Trading volume is higher than ever thanks to easy accessibility and lower brokerage fees. But if you haven’t yet started buying stocks online, you might feel a bit apprehensive about how to begin.
In this post, Gorilla Trades will explain how to set up a brokerage account, how to leverage research tools, where to find the best stock trading platforms, and how to take advantage of a few investment strategies that can help you from the start.
Understanding Online Stock Trading
The internet has been in the mainstream for nearly 30 years. One of the more significant changes the web has generated is making buying and trading stock shares accessible to nearly everyone. Stock trading platforms give individual investors entry into the major stock exchanges, including the New York Stock Exchange (NYSE) and NASDAQ.
There are many reasons why it’s beneficial to buy online stocks. In the past, individual investors needed to go through middlemen, brokerages, or financial institutions to trade stocks. But with automated trading, those barriers don’t exist. Online stock traders basically have direct access to and control over their investment portfolios.
It’s also less expensive to buy online stocks since you don’t have higher brokerage fees or commissions to pay to third-party brokers. Online brokers also offer a wide array of research tools so individual investors can analyze data and trends to make the best investment decisions.
All in all, online stock trading has flipped the script on individual investing. It’s shifted the domain from large financial institutions to individual traders, empowering them to make the right choices with their stock capital.
Choosing Online Brokerage Accounts
There are plenty of online brokerages to choose from when you’re setting up a new account. To remain competitive, these brokerages have to tailor their offerings to make them more attractive to new customers. Still, it’s important to closely evaluate the options you have. Some of the criteria to analyze include the following.
Fees and Commissions
Most mainstream brokers provide commission-free trading and try to keep their prices affordable. However, be on the watch for “hidden” fees like account maintenance or penalties for withdrawal. Take the time to get fully informed on how much a brokerage will cost and where your money will go.
Platform Features and Usability
Online brokers place a premium on making their trading platforms simple to navigate. The best platforms offer several features that allow you to tailor your trading experience to fit your needs. Look for platforms that offer laptop, desktop, and mobile transactions. They should also provide customizable dashboards, demo accounts, and simulated trading for practice.
Research and Education Options
Every brokerage has to provide a comprehensive set of research and educational resources. These include stock screeners, real-time market data, news reports, analytical resources, historical data, and charting tools. All of those options make it easier for investors to stay aware and make informed choices.
Investment Options
Online brokerages offer more than straight stock investments. Some specialize in exchange-traded funds (ETFs), options, mutual funds, and alternative investments. Whatever strategy you decide to execute, make sure your brokerage can support it fully.
Brand and Reputation
Major platforms in the brokerage industry include Robinhood, TD Ameritrade, Fidelity, E*TRADE, and Charles Schwab. Look over online reviews for the brokerages you’re considering to see what experienced customers have to say about them.
Setting Up an Online Brokerage Account
Once you’ve decided on the platform you’ll use to buy online stocks, getting started is a relatively straightforward process.
Required Documentation
Make sure you have personal and identification documents at hand before setting up. These include a government-approved ID like a passport or driver’s license. Be ready to provide your Social Security number or Tax Identification Number, if applicable. You’ll also want to have your personal banking and routing details so you can move funds more easily.
Platform Registration
Head over to your platform’s site or download its mobile app (or both). You should see clear directions on how to register an account. The platform will ask for your personal information and verify your identity. Once you’re in, select the kind of instrument you want to trade through, whether it’s an individual portfolio or a retirement account.
Fund Your Account
If you’ve successfully set up your banking information and tied it to your brokerage account, you can deposit funds in your investment account so you can start trading. Make sure to check out whether your brokerage requires you to maintain a minimum balance and how much it is.
Secure Your Account
Two-factor authentication is rapidly becoming the primary way brokerages safeguard your account. Turn that option on once your account is set up. See what additional security features your online brokerage provides.
Stock Research Tools
Research and analysis should form the core of your trading activities. There are many online tools that cater to beginning or novice investors, as well as deeper tools for more experienced traders. Here are some of the most common and useful research tools to look for.
Stock Screeners
Stock screeners filter select stocks from the thousands of commodities available to the public. You can set parameters to see stocks according to market sector, market cap, price-to-earnings ratio, analyst recommendations, and dozens of other criteria. Most brokerages have stock screeners on their websites. You may also find independent online screeners like Yahoo Finance, Zacks, and FINVIZ.
Financial and Earnings Reports
Publicly traded commodities need to file financial reports, especially quarterly or semi-annual earnings reports. These should be available to you through your brokerage.
Some companies send their investors earnings reports and announcements through email, so you might consider setting up a file folder on your email client. These reports will help you evaluate the revenue, profit margins, and general financial stability of the stocks you invest in.
Financial reports should give you a clearer picture of company fundamentals, market trends, revenue, and other important facets investors must know about before trading.
Analyst Recommendations
Look for the most reputable analysts to help direct you to the most promising up-and-coming stocks. While many of these experts deliver solid advice, be wary of those who get too excitable or generate excess hype over certain commodities. Clearer heads must prevail when it comes to finding experts.
How to Execute Online Trades
Once you’ve completed your research, conducting an online trade should be easy. The basic process at most brokerages goes like this:
- Search for the stock you want
- Select whether you want to execute a market order — an immediate trade at the currently listed price — or a limit order which executes the trade when the price reaches your specified limit
- Enter how many shares you want to buy or sell
- Double-check the trade details and confirm the trade
Online brokerages have made trading extremely accessible and quick.
Investment Strategies
You’ll have no shortage of strategies and tactics to choose from when setting up your investments. A few of the most common and effective strategies include the following to mitigate risk:
- Diversify your portfolio across several business sectors, market caps, locations, or instruments
- Set realistic trading goals that you can reach
- Steer clear of emotion-based trading — always rely on hard data and metrics
- Monitor and revise your portfolio holdings from time to time and make adjustments if needed
Your brokerage may offer advice on other strategies that have worked for other investors.
Gorilla Trades: Helping Customers Buy Online Stocks
With this guide to buying stocks online, you are ready to start your trading adventure. If you need more information or want to investigate opportunities, Gorilla Trades can help you with our time-proven approach to picking promising stocks. To find out more, sign up for our risk-free trial and get 30 days of stock alerts.
